HSBC in talks to return to Brazil

HSBC is speeding up negotiations to return to Brazil only three after the lender sold most of its operations in the country as Bolsonaro’s recent victory in the presidential election has triggered a rally in financial markets.

HSBC Holdings Plc is in talks about coming back to the local markets and creating a full corporate and investment bank, according to Bloomberg. The FT adds that bulking up the São Paulo-based investment bank in order to win back domestic corporate clients is one option executive are studying.

HSBC’s plan to rebuild in Brazil comes amid the election of far-right politician Jair Bolsonaro as president on October 30. Bolsonaro, a former army captain with an aggressive and populist rhetoric, has triggered a surge in optimism after campaigning on promises of fiscal discipline, government efficiency and a crackdown on crime.

With a liberal agenda and a strategy taken from the free-market economic playbook, the appeal for the business community is bound up with the specifics of Bolsonaro’s economic program—mass privatizations, ambitious pension reform, and lower taxes.

Bradesco bought HSBC’s Brazil operations in August 2015 for $5.2bn — as the seller joined a string of foreign lenders departing one of the world’s most concentrated banking markets.

Brazil is once again under HSBC’s radar as its new chief executive John Flint works towards his target of putting Europe’s largest bank back into “growth mode”.

However, it is not alone in targeting Brazil. Citigroup Inc. is prepared to step up hiring for work on the $176bn of infrastructure investments it expects over the next five years.

Itau Unibanco, Latin America’s biggest lender by market value, has said it may loosen credit standards given the improving economic outlook.

It’s a huge turnaround from recent years, when the worst recession in Brazil’s history and a national corruption scandal sent many banks and investors fleeing as the country lost its investment-grade credit rating, stocks tumbled and the real reached a record low.